intermediate accounting answer chap021

1、Chapter 21 The Statement of Cash Flows RevisitedAACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may ap

2、proach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercis

3、e and problem in Intermediate Accounting, 5e with the following AACSB learning skills:Questions AACSB Tags Exercises (cont.)AACSB Tags21-1 Reflective thinking 21-15 Analytic21-2 Reflective thinking 21-16 Analytic21-3 R

4、eflective thinking 21-17 Communications21-4 Reflective thinking 21-18 Analytic21-5 Reflective thinking 21-19 Analytic21-6 Reflective thinking 21-20 Communications21-7 Reflective thinking 21-21 Analytic, Communications21-

5、8 Reflective thinking 21-22 Communications21-9 Reflective thinking 21-23 Communications21-10 Reflective thinking 21-24 Communications21-11 Reflective thinking 21-25 Communications21-12 Reflective thinking 21-26 Communica

6、tions21-13 Analytic 21-27 Analytic21-14 Reflective thinking 21-28 Analytic21-15 Reflective thinking 21-29 Analytic21-16 Reflective thinking 21-30 Communications21-17 Reflective thinking CPA/CMA21-18 Reflective thinking 2

7、1-1 Reflective thinking21-19 Reflective thinking 21-2 Analytic21-20 Reflective thinking 21-3 AnalyticBrief Exercises21-4 Reflective thinking21-1 Analytic 21-5 Reflective thinking21-2 Analytic 21-6 Analytic21-3 Analytic

8、21-1 Reflective thinking21-4 Analytic 21-2 Analytic21-5 Analytic 21-3 Analytic21-6 Analytic Problems21-7 Analytic 21-1 Reflective thinking21-8 Analytic 21-2 Analytic, Communications21-9 Analytic 21-3 Analytic, Communicat

9、ions21-10 Analytic 21-4 Analytic, Communications21-11 Analytic 21-5 Analytic, Communications21-12 Analytic 21-6 Analytic, CommunicationsExercises 21-7 Analytic, Communications21-1 Reflective thinking 21-8 Analytic, Commu

10、nications21-2 Analytic 21-9 Analytic, Communications21-3 Analytic 21-10 AnalyticQUESTIONS FOR REVIEW OF KEY TOPICSQuestion 21-1Every cash flow eventually affects the balance of one or more accounts on the balance sheet,

11、and the cash flows related to income-producing activities also are represented on the income statement. The cash flows, though, are not necessarily reported in the period the cash flows occur. This is because the in

12、come statement measures activities on an accrual basis rather than a cash basis. The Statement of Cash Flows fills the information gap by reporting the cash flows directly and in the period the cash flows occur.Questi

13、on 21-2No. Although the Statement of Cash Flows has been a required financial statement only since 1988, the relatively recent requirement completes a “full-cycle“ movement of accounting thought back to cash flow repo

14、rting, which was common practice several decades ago. Prior to the mid- 1930s, the preparation of financial statements on a cash basis was common although today’s cash flow reporting requirements are quite different fr

15、om the cash flow reporting practiced during that earlier period (when emphasis was placed on cash-based income determination). Later, in 1971, APB Opinion 19 required a Statement of Changes in Financial Position that

16、reported “funds flows” that could be defined as either cash or working capital.Question 21-3No, an investment in treasury bills need not always be classified as a cash equivalent. A guideline – not a rule – for cash e

17、quivalents is that these investments must have a maturity date not longer than three months from the date of purchase. However, flexibility is permitted and each company must establish a policy regarding which short-t

18、erm, highly liquid investments it classifies as cash equivalents. The designation must be consistent with the company's customary motivation for acquiring various investments and the policy should be described in

19、disclosure notes.Question 21-4Transactions that involve merely transfers from cash to cash equivalents such as the purchase of a three-month treasury bill, or from cash equivalents to cash such as the sale of a treasury

20、 bill, should not be reported on the Statement of Cash Flows. A dollar amount is simply transferred from one “cash” account to another “cash” account so that the total of cash and cash equivalents is not altered by s

21、uch transactions. An exception is the sale of a cash equivalent at a gain or loss. In this case, the total of cash and cash equivalents actually increases or decreases. The increase or decrease is reported as a cash